Published January 14, 2015
The chief investment officer of troubled Stanford Financial Group was expected to be released on $300,000 bond Friday after a court hearing in which she was painted alternately as the scapegoat for what regulators now call a massive Ponzi scheme and as one of the few people who knows where millions stolen from investors is hidden.
Laura Pendergest-Holt, who looked pale and solemn in a black pantsuit, appeared in federal court as new details emerged showing the head of the firm borrowed $1.6 billion from the troubled company's assets.
Pendergest-Holt, who faces charges she obstructed the Securities and Exchange Commission's investigation of the Stanford scandal by lying about her knowledge of the firm's activities and by omitting key details, has to post $30,000 cash, wear an ankle monitor and find a job within 10 days as she heads to Dallas for more hearings in her case.
The SEC on Friday accused Pendergest-Holt's boss, Texas billionaire and company CEO R. Allen Stanford, and his finance chief James M. Davis of conducting a "massive Ponzi scheme" through companies they controlled, including Antigua-based Stanford International Bank. Stanford and Davis misappropriated billions of dollars of investors' money and falsifed the bank's financial statements to conceal the fraud, the agency said in an amended civil complaint filed in federal court in Dallas.
The SEC on Feb. 17 charged Stanford with perpetrating an $8 billion investment fraud, saying he lied about the safety of investments sold by the bank as certificates of deposit and promised unrealistically high rates of return. The SEC froze the assets of three of his companies. FBI agents served Stanford with legal papers last week, and he was ordered to surrender his passport, but has not been charged with a crime.
Adding a new dynamic into the case, the regulators now say the fraud was a Ponzi scheme, in which early investors are paid returns from money put in by later investors.
Pendergest-Holt — termed "indispensable" to Stanford's alleged scheme in the original SEC complaint — was "set up" by men she trusted: Stanford and Davis, her attorney Dan Cogdell said Friday.
Cogdell said the woman whose position at Stanford involved handling millions in investments will have to get $20,000 of that money from her in-laws, as her assets were frozen.
The Justice Department had sought $1 million in bond, arguing that Pendergest-Holt was one of three people with access to information about $6 billion in missing funds. During the hearing, Justice Department attorney Paul Pelletier repeatedly raised questions about a missing computer thumb drive containing information about Stanford's Tier III portfolio, which represented about 81 percent of the bank's portfolio.
Pelletier maintained that Pendergest-Holt was the last person to have the thumb drive.
However, Cogdell scoffed at both the $1 million bond request and the charges against his client, who he said had been cooperating with the investigation when she was arrested.
"She is going to fight this accusation with every resource, with every ounce of energy she has," Cogdell said, "She is not guilty. She will plead not guilty. She is going to be found not guilty."
Pendergest-Holt was arrested Thursday in Houston, where Stanford Financial Group is based.
Cogdell noted Friday that Pendergest-Holt had to get a salary advance of $10,000 to travel to Houston for the SEC interview.
However, FBI Special Agent Vanessa Walther testified that Pendergest-Holt had earned a base salary of $350,000 in 2007 and $375,000 in 2008, with bonuses of about $700,000 each year. Walker also said Pendergest-Holt owned properties in Mississippi and North Carolina, and had access to a Credit Suisse account containing about $160 million. She signed over her access to the account Thursday.
Pendergest-Holt agreed Friday to waive a probable cause hearing, allowing her case to be moved to Dallas, where the SEC charges were filed.
Court documents filed against Pedergest-Holt refer to "Executive A," who is Stanford, a person familiar with the case told The Associated Press on condition of anonymity because it is an ongoing investigation.
Documents filed in Pendergest-Holt's case indicate that Stanford grew irate at a meeting of executives earlier this month as the feds closed in.
The court papers say that people who attended the Feb. 5 meeting in Miami described Stanford pounding the table and saying, "The assets are there."
At another meeting, the documents say, it was revealed that Stanford had taken a $1.6 billion loan from the company's assets.
The government alleges in a federal complaint that Pendergest-Holt obstructed the investigation with some of her answers to SEC investigators' questions, including failing to reveal to the SEC how much she knew about investments in Stanford International Bank Ltd.
Stanford is accused in civil charges of lying about the safety of investments he sold as "certificates of deposit" and promised unrealistically high rates of return. Regulators also said he faked historical data about other investments which he then used to lure in more investors for the CD products.
Michael Zarich, the company's senior investment officer, has told authorities he didn't know where 90 percent of Stanford's portfolio was invested. Zarich has said he was trained by Pendergest-Holt to deflect questions about the investment strategy while pitching to wealthy clients in Antigua, where the bank was chartered.
When he tried to learn how the money was invested, Zarich has said Pendergest-Holt and Davis turned him away. Zarich also has said Pendergest-Holt armed him with answers for potential investors worried about the size of Stanford's tiny, Antigua-based auditor.